(Bloomberg News) Legislation authorizing one or more self-regulatory organizations to oversee registered investment advisors is "directionally, exactly what we want," said Stephen Luparello, vice chairman of the Financial Industry Regulatory Authority.

"As we look at it now, I don't think there's anything in there that would compromise us or any other organization that wanted to step up and be an SRO," said Luparello, of a draft bill circulated by Representative Spencer Bachus, an Alabama Republican, at a Financial Services Institute Inc. conference in Washington today.

Much of the costs of assuming oversight of investment advisors as a self regulator are already embedded in Finra's infrastructure, according to Luparello, who oversees regulatory operations for Finra, which is funded by the brokers it regulates.

His comments came as Congress is considering whether to name a self regulator for registered investment advisors. Richard Ketchum, chairman and chief executive officer of Finra, told a subcommittee of the House Financial Services Committee Sept. 13 that his group was "uniquely positioned" to handle the job.

Bachus, who leads the full committee, proposed draft legislation last month that would charge one or more self- regulatory groups, under the authority of the U.S. Securities and Exchange Commission, with overseeing registered investment advisors. The proposal didn't specify whether the self regulator should be Finra or another group.

The SEC released a report in January recommending three options for enhancing oversight of registered investment advisors including levying user fees on advisors to fund examinations by the SEC, authorizing a self-regulatory organization to oversee the industry and giving Finra authority to examine advisors that are also registered as broker-dealers.

Ketchum told lawmakers that Finra would create a separate unit with separate governance to oversee registered investment advisors if that's what Congress decides.

Finra has the necessary experience, resources and track record to oversee investment advisors, William Dwyer, chairman of the Financial Services Institute and president of national sales and marketing for Boston-based LPL Investment Holdings Inc., said in a written testimony to the Capital Markets Subcommittee on Sept. 13. The Financial Services Institute is a membership and lobbying group for independent broker-dealer firms.

The draft legislation from Bachus is "an overreaching solution to inadequate SEC funding,'' Jack Herstein, president of the North American Securities Administrators Association, said to the conference yesterday. His group, which represents state securities regulators, "vigorously'' opposes a self- regulatory organization that would oversee state-registered investment advisors, he said.

"If the goal is investor protection, then the shortest distance to that goal is to ensure the SEC is adequately funded,'' he said. "We see little benefit in constructing a new layer of bureaucracy.''